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What is inventory shrinkage? Describe the adjusting entry that would be recorded to account for inventory shrinkage.

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

Chapter9: Sales And Purchases

Section: Chapter Questions

Problem 12DQ

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Question

What is inventory shrinkage? Describe the adjusting entry that would be recorded to account for inventory shrinkage.

Definition Definition Entries made at the end of every accounting period to precisely replicate the expenses and revenue of the current period. This is also known as end of period adjustment. It can also refer to financial reporting that corrects errors made previously in the accounting period. Every adjustment entry affects at least one real account and one nominal account.

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